UK Plans Think, But Don’t Act, on Portable Alpha

“U.K. institutions are investigating the use of portable alpha with their money managers, but few U.K. pension plans have implemented such a strategy.

“So far, only a few pension plans have adopted explicit portable alpha strategies, mainly in their fixed-income portfolios, in an attempt to improve returns, said Roger Urwin, global practice director, investment consulting, at Watson Wyatt Worldwide, Reigate. But it’s an idea whose time is about to come. There is a lot of investment efficiency left on the table if you don’t separate alpha and beta, he said.”

“While explicit portable alpha mandates are rare, managers of active currency overlay and global tactical asset allocation mandates widely use this type of strategy. So, many U.K. pension plans are making use of portable alpha without realizing it…”